Reflection And Discussion Forum Week 6 Reflect On The Assign

Reflection And Discussion Forum Week 6reflect On The Assigned Readings

Reflection and Discussion Forum Week 6 Reflect on the assigned readings for the week. Identify what you thought was the most important concept(s), method(s), term(s), and/or any other thing that you felt was worthy of your understanding. Also, provide a graduate-level response to each of the following questions: Discuss potential liability a principle may have to third parties based on the actions of an agent. What factors may limit this liability? What general rights do shareholders hold in a corporation? How do these rights vary, if at all, based on different classes of stock? Explain the difference in a corporate merger and a corporate consolidation, and include in your analysis supporting examples. [Your initial post should be based upon the assigned reading for the week, so the textbook should be a source listed in your reference section and cited within the body of the text. Other sources are not required but feel free to use them if they aid in your discussion]. [Your initial post should be at least 450+ words and in APA format (including Times New Roman with font size 12 and double spaced). Post the actual body of your paper in the discussion thread then attach a Word version of the paper for APA review] Week 6 - Short Essays Question I - Brandon installs sheds and storage buildings for Shedmax, LLC. Brandon must be at work each day by 8:00 a.m. and is off at 5:00 p.m. and is paid at a rate of $12/hour. Brandon uses tools provided by Shedmax to do his work. However, when Brandon is completing the installation process, he is often working alone. Is Brandon an employee of Shedmax or an independent contractor? Give a reasoning for your answer. Question II - Paul is the sole incorporator of Hemp Co., a company that processes hemp into clothing. Prior to incorporation, Paul enters into a contract on Hemp Co.’s behalf with a local farmer for the purchase of the crop. After formation of the corporation, the board does not ratify the contract because Paul bought the crop at 3 times the market price. Who is liable to the farmer? Question III - Tina Technology is looking to raise $85,000 worth of capital, and she is looking to raise that money through the internet and still fall under an SEC exemption. How should Tina go about raising that money? Due to the amount of capital she is looking to raise, will Tina be subject to any other special requirements?

Paper For Above instruction

The assigned readings for Week 6 primarily focus on key concepts in corporate law, agency relationships, liability, and securities regulations, which are fundamental to understanding the operation and regulation of business entities. Among the most significant concepts was the distinction between agency and employment, particularly understanding the circumstances under which a principal may be liable for the acts of an agent. This relationship hinges on whether the agent acts within the scope of authority granted by the principal and whether the actions are authorized or unauthorized.

The concept of vicarious liability is pivotal here; it allows third parties to hold the principal liable for the acts of the agent performed within the scope of their agency. Factors that limit this liability include whether the agent acted outside of their authority, whether the act was unauthorized, or if the agent was acting solely for personal gain without the principal’s knowledge. For example, if an employee exceeds their authority or commits a tortious act outside their work duties, the principal may not be held liable, emphasizing the importance of scope of authority in agency law (Klein, 2020).

Understanding shareholders’ rights is also critical, as they encompass voting rights, rights to dividends, and rights to residual assets upon liquidation. These rights can vary based on the class of stock issued; common shareholders typically possess voting rights and dividend claims, whereas preferred shareholders may have preferential dividend rights and priority in liquidation but often lack voting rights (Bainbridge, 2019). Variations in stock classes influence the control and financial benefits to shareholders, impacting corporate governance and capital structure.

The difference between a corporate merger and a consolidation lies in the legal and structural changes to the entities involved. A merger involves one corporation absorbing another, where the acquired company ceases to exist as a separate legal entity, and the surviving entity continues operations. Conversely, a consolidation results in the creation of a new corporation, with both previous entities ceasing to exist independently (Miller & Jentz, 2021). For example, if Company A merges into Company B, Company B continues, and Company A is dissolved. In contrast, a consolidation creates a new entity, say Company C, which replaces the previous companies (Rhoades, 2020).

Question I: Is Brandon an Employee or Independent Contractor?

Based on the information provided, Brandon appears to be an employee rather than an independent contractor. Several factors contribute to this classification, including the fact that he is paid hourly, must adhere to a fixed work schedule, and uses tools provided directly by Shedmax. The control exerted over his work hours and the use of company tools suggest a traditional employer-employee relationship. The IRS guidelines emphasize the degree of control and independence in determining employment status (IRS, 2021). If Shedmax controls Brandon’s work schedule, methods, and tools, he is likely classified as an employee, which implies certain legal obligations for Shedmax regarding taxes, benefits, and liability.

Question II: Liability of Hemp Co. and the Farmer

Since Paul was the sole incorporator before Hemp Co. was officially formed and entered into a contract at a significantly higher price than the market value, the liability for the contract hinges on whether the corporation ratifies or adopts the contract post-incorporation. Under corporate law, a corporation is generally liable only for contracts it expressly or implicitly adopts after formation. Since the board decided not to ratify the contract because of the inflated purchase price, the corporation is not liable. Consequently, Paul, acting in a personal capacity prior to incorporation, remains liable to the farmer for breach of contract (Macey & Poff, 2022). If Paul did not disclose that he was acting on behalf of an unformed corporation, the farmer may also pursue Paul personally.

Question III: Raising Capital via Internet and SEC Regulations

To raise $85,000 through the internet while remaining compliant with SEC regulations, Tina should consider utilizing Regulation Crowdfunding (Regulation CF), which allows companies to raise up to $5 million from a broad investor base provided certain conditions are met. This regulation stipulates the use of an SEC-registered intermediary, such as a funding portal or broker-dealer, and requires disclosures about the company’s financials and business operations (SEC, 2023). Given the amount Tina aims to raise, she must also adhere to specific reporting requirements, including providing annual reports and financial statements. While Regulation CF provides a pathway for raising capital with certain exemptions, Tina must evaluate whether her offering qualifies under other exemptions, such as Rule 506(b) or Rule 506(c) of Regulation D, which permit raising larger amounts without extensive SEC filings but impose restrictions on the type of investors and solicitation methods (Harper, 2022). Additionally, she must ensure compliance with state securities laws and consider the implications of federal and state registration exemptions.

Conclusion

The week’s readings reinforce the importance of understanding legal distinctions in agency, liability, and securities law, which are essential for structuring and operating businesses compliant with legal standards. Recognizing the nuances in employment classification, corporate liability, and capital-raising strategies allows entrepreneurs and managers to mitigate risks and capitalize on legal opportunities effectively.

References

• Bainbridge, S. M. (2019). The Law of Corporations and Other Business Associations (2nd ed.). Wolters Kluwer.
• Harper, J. (2022). Securities Regulation: Cases and Materials (13th ed.). West Academic Publishing.
• IRS. (2021). Independent Contractor (Self-Employed) or Employee? IRS.gov. https://www.irs.gov/businesses/small-businesses-self-employed/employee-vs-independent-contractor
• Klein, P. G. (2020). Agency Law and Principles. Harvard Law Review, 133(5), 1235-1250.
• Macey, J. R., & Poff, G. (2022). Corporate Law (8th ed.). Foundation Press.
• Miller, R. L., & Jentz, G. A. (2021). Business Law Today: Text and Summarized Cases (13th ed.). Cengage Learning.
• Rhoades, A. (2020). Corporate Mergers and Consolidations. Journal of Corporate Law, 45(3), 567-582.
• SEC. (2023). Crowdfunding: A Guide for Entrepreneurs. Securities and Exchange Commission. https://www.sec.gov/smallbusiness/exemptofferings/crowdfunding